I’m often asked by traders how to calculate the tick and pip value in forex trading.
In this article, I’d like to take a closer look at currency futures and provide an explanation of “tick value” as it is commonly used in futures trading.
In a later article, we’ll discuss pip value, which is what the tick value is called in interbank currency trading.
Calculating the tick value for currency futures contracts
The best-known currency futures contract is probably Euro FX Futures, which is listed on the Chicago Mercantile Exchange (CME) and can be traded 24 hours a day through its Globex electronic trading system.
- The ticker symbol is 6E.
With this currency futures contract, you trade the euro against the US dollar.
- The contract size is 125,000 euros
Quotes are given to four decimal points – e.g. $1.3110.
The smallest price change, called a tick, is thus fixed at 0.0001.
The tick value is $12.5 ($0.0001 x 125,000/contract).
If you multiply the current exchange rate by the contract size, you get the current contract value.
Assuming a dollar exchange rate of 1.3110, one futures contract has a value of $163,875 (1.3110 x the contract size of 125,000).
The following table shows contract size, tick size, and tick value for the most important forex futures.
In currency futures trading, all currencies trade against the US dollar:
|Currency future||Ticker||Contract size||Tick size||Tick value/contract||Margin|
|Euro FX||6E||125,000 EUR||0.0001 USD per EUR||12.5 USD||2,500 USD|
|Swiss Franc||6S||125,000 CHF||0.0001 USD per CHF||12.5 USD||2,625 USD|
|British Pound||6B||62,5000 GBP||0.0001 USD per GBP||6.25 USD||1,837 USD|
|Japanese Yen||6J||12,500,000 JPY||0.000001 USD per JPY||12.5 USD||2,851 USD|
|Canadian Dollar||6C||100,000 CAD||0.0001 USD per CAD||10.0 USD||1,422 USD|
|Australian Dollar||6A||100,000 AUD||0.0001 USD per AUD||10.0 USD||1,668 USD|
|New Zealand Dollar||6N||100,000 NZD||0.0001 USD per NZD||10.0 USD||1,688 USD|
|Mexican Peso||6M||500,000 MXP||0.00001 USD per MXP||5.0 USD||2,225 USD|
If you have any questions about tick value, please post them in the comments section below.